Peter McGauran (Gippsland, National Party, Deputy Leader of the House) Share this | Hansard source

The member for Lyons interjects. It is difficult to deal with this issue when people do not understand the ABC of the mandatory code of conduct. The member for Lyons interjects, ‘Why don’t you make the code of conduct mandatory for the retail sector?’ It is because they have a contract. They know what they are supplying, what they are getting for it and where and how to do it.

The problems in the wholesale sector have remained largely unchanged despite the government putting in place in 2000 a voluntary produce and grocery industry code of conduct. Despite industry attempts to improve trading practices through their own codes of conduct, we have not seen a significant improvement. This code is going to improve the trading conditions in the horticultural industry; it will clarify the responsibilities of growers and wholesalers and increase the transparency of transactions.

The key requirements of the code are that wholesalers publish their preferred terms of trade, growers and wholesalers use written agreements, wholesalers are clearly identified as either agents or merchants, prices agreed in writing under merchant transactions be provided, wholesalers provide written transaction information to growers, independent assessments be available on transactions, and compulsory mediation will occur if disputes arise.

The contracts that are negotiated between suppliers and supermarkets are negotiated with full clarity and include all commercial aspects of the transactions. That does not happen necessarily in the wholesale sector. An unnecessary regulatory burden would impose additional costs on the industry if we were to proceed to a mandatory code of conduct in the retail sector without any measurable benefit with regard to increased clarity and transparency. I appreciate that retailers, processors and exporters are strongly opposed to being included in the code. If they are forced to adapt their trading systems and conduct compliance audits, it could significantly increase the overall compliance costs of the code and impose an unnecessary regulatory burden on businesses that already trade under transparent and clear contractual terms.

For the average grower, the mandatory code of conduct will mean the opportunity to achieve more certainty in their trading relationships with wholesalers, more confidence that business is being conducted in a fair and effective manner, clearer market signals and improved feedback on the quality of produce. The code will be enforced by the Australian Competition and Consumer Commission. At the same time, the government has appointed a horticulture mediation adviser who will help the industry resolve any trading disputes that arise.

The majority of growers and wholesalers support the code. It has not been developed in isolation in some bureaucratic ivory tower. All the way through we have consulted the National Farmers Federation, AUSVEG, Growcom and other organisations such as the Horticulture Australia Council. These organisations are representative of the industry, they have put a number of drafts to their members, and I believe they are worthy negotiators on behalf of the majority view of growers across Australia. There has been enormous and extensive consultation with industry stakeholders. An industry committee will be established to monitor the proposed code and advise the government on matters relating to its operation and performance.

With regard to compliance costs, the code requires terms of trade and the use of written agreements between growers and wholesalers. This is standard good business practice in most industries. There will be minimal additional costs for those growers and wholesalers already using good commercial practices. Clear terms of trade and written agreements will result in reduced disagreements and therefore reduced conflict resolution costs. The government is working with growers and wholesalers to produce contract templates which will further reduce the cost to both wholesalers and growers.

The government is funding the enforcement and administration costs of the code and will subsidise the costs of mediation. This will remove the need for expensive legal costs for growers and wholesalers, which the member for Kennedy seems determined to impose on them by pushing them into the court system. This is a speedier way. If a dispute arises we try to mediate. Failure to mediate then results in ACCC intervention. What could be more enforceable under the law than that? At the same time, everybody has to enter into a contract under the terms of the code. I am sorry, I listened carefully to the member for Kennedy. I would wish to be the hero that he wants me to be, but I am genuinely convinced that this is in the best interests of the industry.

I thought only an Independent could tell the story of John Kerin: that he would go out there and tell people his personal view, what he was going to do, so that people knew he was fighting on their behalf, even though he could not deliver on behalf of the government. That is an Independent’s mentality. That is just cheap populism by a member of a government who wants to walk both sides of the street. They want the personal glorification and the benefit that comes with being part of a government.

We have batted off the wholesaler organisations and the fresh food markets. We have answered their issues. We have argued the case with them, and it is very disappointing for me to come in here and find that the Independents are causing more trouble by potentially delaying the implementation of the code—although I have been reassured by the member for Kennedy that he will not vote against the code if the test should arise. It is a code that has been long in planning. It needs to be implemented. It will be successful.

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